How does a grant typically differ from a bank loan?

A grant is fundamentally different from a bank loan in that it is awarded as a gift, meaning it does not require repayment. This characteristic is the primary distinguishing feature of grants, as they are provided to support specific projects or initiatives without the obligation to return funds. In contrast, a loan represents borrowed money that must be repaid over time, usually with added interest.

The distinction is important for organizations and individuals seeking financial assistance, as grants often come with specific conditions or requirements aimed at ensuring the funds are used for their intended purpose. While loans might come with conditions related to credit worthiness and repayment terms, their primary nature is that they need to be paid back, unlike grants which are intended to support activities without the expectation of financial return.

Understanding this difference helps in comprehending the various funding options available, particularly in the context of grants management and the responsibilities that come with each type of funding.